Oil prices declined on Monday while Asian stock markets posted gains amid growing optimism that the United States and Iran could soon reach an agreement to reopen the Strait of Hormuz, a crucial global oil transit route.
Brent crude and West Texas Intermediate both fell by nearly five percent, trading at $99.41 and $92.49 per barrel respectively.
The potential breakthrough follows months of conflict in the Middle East, which began in late February and triggered sharp increases in energy prices and global inflation concerns.
Despite signs of progress, negotiations between Washington and Tehran still face several unresolved issues, reducing expectations of an immediate settlement.
US President Donald Trump stated on Sunday that he had instructed American negotiators not to hurry the process, saying that “time is on our side” in a post shared on Truth Social.
Meanwhile, Iran’s Tasnim news agency reported that important parts of the proposed agreement remain unsettled. Among the key disagreements are Tehran’s possible surrender of its highly enriched uranium stockpile, the release of frozen Iranian assets under US sanctions, and whether Lebanon will be included in any broader peace arrangement.
Investor optimism nevertheless lifted several Asian markets. Tokyo surged more than three percent in early trading, while Shanghai, Taipei, Manila, Bangkok, Jakarta, Singapore, Sydney, and Wellington also recorded gains. Kuala Lumpur, however, slipped slightly.
Chris Weston, head of research at Pepperstone, noted that attention over the weekend remained focused on the likelihood of a diplomatic breakthrough between the two countries. He added that reports suggest a memorandum of understanding has largely been negotiated, though no immediate timeline has been set.
Investors are also watching upcoming US inflation data closely, particularly the Personal Consumption Expenditures (PCE) index, which is the Federal Reserve’s preferred inflation measure. Analysts believe continued instability in the Middle East and elevated oil prices could further intensify inflationary pressures worldwide.
The conflict began after the United States and Israel launched attacks on Iran on February 28, prompting retaliatory missile and drone strikes by Tehran across the region. Although a ceasefire has been in place since April 8, tensions remain high as negotiations continue.
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